Correlation Between Funko and Dolphin Entertainment

Can any of the company-specific risk be diversified away by investing in both Funko and Dolphin Entertainment at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Funko and Dolphin Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Funko Inc and Dolphin Entertainment, you can compare the effects of market volatilities on Funko and Dolphin Entertainment and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Funko with a short position of Dolphin Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Funko and Dolphin Entertainment.

Diversification Opportunities for Funko and Dolphin Entertainment

0.24

Correlation Coefficient

Funko  Dolphin Entertainment

Modest diversification

The 3 months correlation between Funko and Dolphin is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Funko Inc and Dolphin Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dolphin Entertainment and Funko is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Funko Inc are associated (or correlated) with Dolphin Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dolphin Entertainment has no effect on the direction of Funko i.e., Funko and Dolphin Entertainment go up and down completely randomly.

Pair Corralation between Funko and Dolphin Entertainment

Given the investment horizon of 90 days Funko Inc is expected to generate 0.49 times more return on investment than Dolphin Entertainment. However, Funko Inc is 2.05 times less risky than Dolphin Entertainment. It trades about 0.21 of its potential returns per unit of risk. Dolphin Entertainment is currently generating about -0.09 per unit of risk. If you would invest  1,051  in Funko Inc on September 13, 2024 and sell it today you would earn a total of  99.00  from holding Funko Inc or generate 9.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Funko Inc  vs.  Dolphin Entertainment

Funko Inc

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Funko Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward-looking signals, Funko is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Dolphin Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dolphin Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Funko and Dolphin Entertainment

The main advantage of trading using opposite Funko and Dolphin Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Funko position performs unexpectedly, Dolphin Entertainment can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Dolphin Entertainment will offset losses from the drop in Dolphin Entertainment's long position.

The idea behind Funko Inc and Dolphin Entertainment pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.